Obama wants plan to cut deficit by Aug. 2, with elimination of tax breaks for super-rich and oil companies

President Barack Obama, during a news conference in the East Room of the White House on Wednesday, said a plan to cut the deficit needs to include getting rid of tax breaks for the super-rich and for oil companies.

WASHINGTON — In a blunt challenge to Republicans in Congress, President Barack Obama insisted Wednesday that elimination of selected tax breaks for oil companies and the super-wealthy must be included in any deficit reduction plan.

At his first White House news conference in three months, Obama also called on Congress to renew a payroll tax cut that took effect on Jan. 1, one of several steps he said lawmakers can take quickly to help reduce 9.1 percent unemployment.

Although he declined to announce support for legalizing gay marriage, he defended his record on rights for homosexual Americans, saying he had done more to advance their cause than any of his 43 presidential predecessors.

On the deficit and economy, Obama said both parties must be prepared to "take on their sacred cows" as part of the negotiations, with Democrats accepting cuts in government programs.

At the same time, he said any agreement must include increased government revenue. Attempting to blunt Republican criticism, he said he also wants to extend existing middle class tax cuts.

"The tax cuts I'm proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund companies and jet owners," he said.

"That's not radical," he said, adding quickly that a bipartisan agreement is possible to cut deficits, raise the government's $14.3 trillion debt limit and avert a threatened financial crisis. He said a plan must be in place by Aug. 2, a date he called "a hard deadline."

Obama's last news conference was in March. In the months since then, the economic recovery has slowed, the president has announced a plan to begin withdrawing U.S. combat troops from Afghanistan and the administration has joined an international military coalition working to prevent the rout of rebels hoping to topple Libyan leader Moammar Gadhafi.

The budget deficit is projected to reach a record $1.4 trillion for the current fiscal year, which ends Sept. 30. Republicans in Congress have been insistent in recent days that any deficit reduction be limited to spending cuts, including reductions in benefit programs such as Medicare and Medicaid, and exclude additional revenues.

In remarks made during the day, Senate Republican leader Mitch McConnell of Kentucky said Obama "said as recently as six months ago that keeping taxes where they are enables businesses to hire more workers. In other words, that raising taxes leads to fewer jobs. So he can call for tax hikes. But he can't call for tax hikes and job creation. It's one or the other. ''

Obama said talks led by Vice President Joe Biden had "identified more than $1 trillion worth of spending cuts already. But everyone also knows that we need to do more to close the deficit," he added, citing a goal of $4 trillion.

Obama bristled at calls for him to show greater leadership in the debt talks.

"They need to do their job. Now's the time to go ahead and make the tough choices. That's why they're called leaders," he said.

IMF: Debt ceiling must be raised

The International Monetary Fund warned on Wednesday that a failure to raise the debt ceiling would pose risks to the global economy. John Lipsky, acting managing director of the IMF, said a default by the U.S. would rattle markets and send interest rates soaring, making mortgages and other consumer loans more expensive. Lipsky was confident that Congress will reach a deal before that happens. The IMF said enacting steep spending cuts or tax increases too quickly could hamper the U.S. recovery. It advocated raising the borrowing limit and implementing a long-term deficit-reduction strategy. The IMF's warnings on the U.S. deficits echo recent statements from major credit rating agencies such as Standard & Poor's and Moody's. They have warned that they may have to downgrade the United States' credit rating if a deal on the debt ceiling isn't reached and progress toward cutting the deficits isn't made.